EFFECT OF INTERNAL CONTROLS ON EXPENDITURE MANAGEMENT OF NANDI COUNTY GOVERNMENT

Abstract

The enactment of the new constitution in 2010 brought to the fore the need for public financial management reforms. The need for reforms was occasioned by the anticipated creation of county governments and inherent risks witnessed previously in the centralized government where colossal amounts of public funds were lost through corruption, unfair allocation of funds fanning inequality. This study sought to examine the effect of internal control on expenditure management by county government of Nandi. The specific objectives of this study were to determine the influence of control environment, control activities, information and communication and monitoring on expenditure management of County government of Nandi. The research was conducted using both qualitative and quantitative research design. This study targeted a total population of 241 and a sample size of 150 respondents from the Finance and economic planning department. The researcher collected data using semi structured questionnaires with close ended questions. From the study sample 136 respondent were able to answer the questionnaire .The instruments were subjected to cognitive pre-testing to ascertain whether the intended recipients understand the questions. The results showed Cronbach’s alpha test with a coefficient of 0.7 and above hence confirming the instrument's accuracy, completeness, and internal consistency respectively. Data analysis was done using both descriptive and inferential statistics. Descriptive statistics used were frequency, mean and standard deviation while correlation and Multi-linear regression analysis under inferential statistics. The researcher presented data using frequency tables and charts. The findings revealed that control environment had a positive and significant effect on expenditure management (β; 186; P<0.05). The study also revealed that control activities have a positive and significant effect on expenditure management (β; 112; P<0.05).The findings of the study also showed that information and communication had a positive and significant effect on expenditure management (β; 153; P<0.05). Lastly, the results showed that monitoring has a positive and significant effect on expenditure management (β; 427; P<0.05). The study recommended that the county government should ensure that the organizational structure incorporates control environment; adopt policies that strengthen the control activities, ensure timely flow of information and communication and lastly incorporate standards that ensures frequent monitoring and follow ups thus enhancing expenditure management.